Alfa Capital Management Company has launched a trust management strategy focused on investments in residential real estate in the UAE

A trust management strategy has appeared on the Russian market, focused on investing in real estate in the UAE and other countries of the Middle East. The market for such real estate grew strongly last year, including due to Russian investors, whose interest remains. But experts pay attention to the risks of such investments, not only general market, but also country-specific.

Alfa Capital Management Company has launched the Alfa Arab Meters trust management strategy, which is focused on investments in residential real estate in the UAE, as well as other states in the region, the company said. Apartments and apartments under construction will be purchased in UAE dirhams. “Evaluation and selection of facilities will be carried out with the participation of international partners,” explained Nikolai Antipov, director of the center for work with institutional and corporate clients of the company.

The strategy is available only to qualified investors (the minimum entry threshold is 1 million rubles). The term is five years. The management company estimates the potential ruble yield at the level of 15.3% per annum. “A wide range of investors will be able to better diversify their portfolios, having received currency exposure on promising assets in a friendly jurisdiction,” notes Mr. Antipov.

The choice of region is not accidental. In 2022, more than 86,000 home sales were registered in Dubai, according to the Best Homes real estate agency, surpassing the previous record of 80,000 in 2009. The total volume of transactions amounted to about 208 billion dirhams ($56.6 billion), which is almost 80% more than in 2021. At the same time, Russians were one of the key buyers, said Ivan Tyrtyshny, a leading consultant at Knightsbridge. “Since March 2022, we have seen a significant increase in demand from Russian investors for real estate in the Middle East, including the UAE,” says Alexey Novikov, managing partner of NF Group.

This year, according to Ivan Tyrtyshny, Russians continue to be actively interested in buying real estate in the UAE. The high interest is due to several reasons. In the face of political uncertainty and economic instability, many began to look for opportunities to diversify their assets and investments. “Real estate in the UAE and other countries of the Middle East was an attractive alternative, given the stability of these regions and the high potential for growth in property values,” says Mr. Novikov.

The UAE has created attractive conditions for doing business and resettling people, experts say. “There is an attractive tax system, an easy system for obtaining resident status and work permits,” says Dmitry Osipov, general director of Veles Trust Management Company. Such proposals by Russian management companies, as noted by Dmitry Yartsev, Deputy General Director of KSP Capital, are aimed at expanding the product line for investors and allow diversifying investments in real estate.

Timur Kudratov, co-founder of Enlightened Minds Investments, refers to the risks of such investments as the instability of the global economic situation, possible changes in the legal and fiscal sphere of the country, as well as fluctuations in the real estate market that may affect the value of objects.

According to the CEO of TKB Investment Partners, Dmitry Timofeev, the assets of MC clients, even in friendly jurisdictions, are subject to much greater exposure to risk than in the local market, and not all retail investors may be aware of this.

Market participants interviewed by Kommersant are considering the possibility of investing in real estate in friendly countries. “There are plans to invest in various types of residential and commercial real estate in the UAE. The yield is expected to be above 20% per annum,” notes Mr. Osipov. According to Boris Golubev, director of the management department of the closed-end mutual investment fund RSHB Asset Management, investments in real estate through the closed-end mutual fund mechanism have the same risks, as well as the risks of direct investment in real estate in the absence of direct control: “While we are studying the experience of our colleagues, and under certain conditions and the emergence of the interest of our clients, we will be ready to form such an investment product.”

Vitaly Gaidaev